Some considerations during a market dip
In the last few days we had a huge dip in the cryptocurrency market. I was buying Hive when the price was 40 cents and ended up losing all my stable coins to that and now Hive is sitting at 33 cents at the time of writing this article. Many people say that the market fell because of the war news we had and some people say that it is because of the halving that is going to happen I don't know what to believe and we cannot be sure what could be the reason either.
People who trade regularly don't worry too much about dips and sometimes if they have an automated bot doing the job for them, they might suffer a little bit but they know where and how to compensate. This can even be an opportunity for them because there will be too much of market activity and sometimes they short by selling at a high price and buying them back at a low price. That is also another strategy during a dip.
Every dip is an opportunity
I believe every dip in the market is a good opportunity to trade because there is a small percentage recovery after every dip. Even if there is a huge crash, some cryptocurrencies recover after the dip. Sometimes the market would see that recover immediately in a few days and sometimes it can happen in a week. Yesterday the price was Hive went as low as 30 cents and today the price is trying to touch 34 cents. This is where there is a trading opportunity. Imagine if people had bought it at 30 cents and sold it at 34 cents. It is a great profit if the trading quantity is huge. In some cases, we can even do a swing trade.
We have to also be very careful about the dip. The reason is because during the dip we will know when the lowest point can occur. Sometimes a dip can happen continuously and it can even keep going down for days based on the reason why a dip usually happens. People said that yesterday's dip was because of the war news but it did not last for a long time and it mostly made many coins suffer. Sometimes the dip can be very short and the market will immediately bounce back except for a few coins alone.
In an ideal scenario, we can convert every dip into an opportunity because we can wait for the market to go low and settle down. After it settles, we can make a purchase and wait for the market to recover back and sell them. In most cases, long-term traders will purchase during a market dip and hold them for the long term, and book a very good profit when the next bull market happens.
Panic buying is mostly FOMO
During a dip, it is very common to see many people doing panic selling. That's not interesting but some people do panic buying. People might have some value and calculation in mind and would want to trade and finally end up purchasing something at a very high price when market itself is low. This happened yesterday for me because I aimed to do a quick trade and bought Hive at 38 cents and wanted to sell them again at 42 cents. But the market was continuously going down and I ended up purchasing some more at 35 cents and lost all my liquidity. Today the market is around 33 cents and I have to wait until it is back to 40 cents so that I can do a safe selling.